Art Fairs and the Expansion Strategies of Frieze Magazine - Research Proposal Example

Entrepreneurship and enterprise Task: Introduction Frieze is a major publishing entity in Britain. This write up will assess the progress of the magazine. The assessment will entail identification of its major stages and the expansion strategies it seeks to undertake. The assessment will also relate developments in the entity to relevant theories. Some of the theories learnt include shareholder’s theory. The theory seeks to maximise the investment of the owners. This theory is relevant in this scenario since the partners are maximizing shareholders’ interest by ensuring the entity revenues increase. Increase in revenues will result in higher dividends to the shareholders hence, maximizing their benefits. This theory pertains relates to financial investment made in the company. Therefore, this theory seeks to ensure that the investments made in are growing constantly. The Frieze scenario also brings to focus investment theories. These theories elaborate the why people invest well aware of the possible consequences. The theories also elaborate the perception of individuals towards risks. The risk bearing theory introduces risk as a vital aspect of investment. In the above scenario, the three partners risked their finances by investing in such a firm. The partner could have lost the funds invested in the entity if it failed to succeed. The theory outlines risk taking as a vital factor, which triggers investment (Carrillo 2007. P. 100). This write up will evaluate major happenings in this entity. The major happenings include launch of the magazine, introduction of art fairs and the expansion strategies available to the entity at 2008. The analysis of the major happenings will evaluate the factors, which triggered the entity’s success at each stage. This write will culminate with a detailed examination of the entity’s possible expansion strategies and the possible implications of their adopting any of the strategies. Part I Launch of magazine 1991 Main Findings  The three individuals had a clear strategy of what they wanted to undertake. A magazine targeted art lovers in England. The founders had identified a specific field, which their magazine would target. The magazine targeted the arts lovers. Clear identification of their segment enabled the company to focus on their customers’ needs. This also enabled the team identify their competition easily. Consequently, they had to provide the clientele in the art world with more value than their rivals. The managerial team had identified the name that their magazine was to assume. This helped the magazine to maintain its values. Therefore, the magazine maintained its appeal to the market segment it targeted. This was extremely crucial since failure to appeal to the target market would have resulted in a declining market. The decreased market would have had dire consequences on this entity since it would not the capability to cover its cost (Carrillo 2007, p.3). This would have culminated in its closure at such an early stage. Reasons for success The three founders provided the market with something different since other magazines were performing poorly in the industry. It was evident that they had failed to capture the interest of art lovers. The founder commenced by providing the arts lovers with a magazine, which had a unique name. The name was very vital since it is the first marketing tool for such product. Therefore, poor naming of the magazine would have culminated in failure. Additionally, the launch at the Royal College of arts enabled the magazine reach the right target market. The college would largely constitute of art lovers who would market the magazine further (Madura 2011, p.5). Art fairs Main Findings  In 2003, the cofounders set up another entity. The objective of the entity was to host an art fair. The cofounder had no finances. They took a risk by borrowing from a bank. However, their venture was successful and surpassed their expectation. This fair attracted countless individuals. Reasons for success The fair was a marketing tool for not only the artefacts in display but also the magazine. The prominence of the art fair culminated in it becoming one of the most crucial events in the arts calendar. The prominence of the fair increased the magazines market segment since the magazine was closely associated to the event. The founders of the magazine had an elaborate strategic plan (Carrillo 2007, p.4). The plan allowed the magazine to capitalize on the success of the fair to make entries in more lucrative markets. The success of the art fail contributed significantly to the expansion of the magazine’s market. Now, the pioneers of the magazines were contemplating launching their product in other languages. Link to academic concepts Launching the product in other languages would set the stage for rapid expansion. However, the partner had to be cautious since they did not have real facts to back up such a venture. At this stage, they encountered real managerial challenges. First, the entity had a flat structure allowing constant interaction between the partners and teams. However, the expansion would lead to several changes. First, they would need a structure, which maintains the entity’s values. These entity values contributed to the success of the magazine. The values ensured that the magazine met the client’s needs (Madura 2010, p. 153). These challenges relate closely to the academic work, which addresses corporate management. The partners adopted the shareholder theory, which seeks to increase the shareholders’ value. As such, the management of the entity adopts a path, which increases the shareholders’ value through higher profitability. Growth decision direction in 2008 Main Findings  At this phase, the most vital way of sustaining growth was maintaining its values. The rapid expansion was necessitating certain structural changes in the organization. These structural changes could erode the values, which won the entity its market niche. The structural changes would reduce contact between the teams and partners. This would culminate in the teams failing to meet the client’s needs. The supervision of the partner was extremely vital since the entity needed to maintain its brand. The rapid expansion would result in the partners loosing focus on the core values of the magazine. The partners would be busy strategizing on entries into other markets. However, they maintained contact with teams. Additionally, they also passed their values to other managers who would constantly work with the teams. Reasons for success The organization also opted to hold more fairs. This would boost the popularity of their brand and earn the entity more income (Carrillo 2007, p.4). An organizational structure is exceedingly vital since it establishes the hierarchy of authority in an organization. This organization structure adopted in this entity is a moderation of a functional and regional structure. The combination of the structure has enabled the entity to assign personnel to address its expansion strategy. The functional structure will ensure that the entity can undertake its core objectives appropriately enabling it to meet its clients’ needs. Maintaining the entity’s values and organization structure has contributed significantly to the success of the entity (Sahlin-Andersson & Engwall 2002, p.132). Part II Strategic growth opportunities The organization has several strategic growth options which will enable the entity expand its market. The management should evaluate the option prior to undertaking any option cautiously. The evaluation should analyse the market’s potential, possible revenues and effects on organizational structure. Publishing in multiple languages The management contemplated launching their product in China. This market has a massive potential owing to the expansion of the economy. Entry into this market would make the magazine a leader in this industry globally. However, the organization would encounter countless challenges. China has strict legal regulations. The current rules create a conservative environment in which liberal writers may encounter censorship. Therefore, this entity has two options. Adapt its content to the market or sustain its current content and encounter possible censorship. Entry in this market would require creation of regional offices, which would manage the product in China (Carrillo 2007, p.11). The entry into this market will require additional managerial personnel who understand the Chinese market well. This would assist in the entity in researching on the customer requirements in this market. The entity should also examine the massive cost that may result from entry into this market. The entity would spend considerable resources on activities such as shipping. This would erode returns from this market. It is tricky to forecast the outcome of the entity’s entry into this market. However, if it breaks even in its first few years, then the entity should pursue this market (Kazmi 2008, p. 234). Organizing additional fairs The arts fairs were a vital in the marketing of the entity’s magazine in its early stages. The fairs did not only increase the popularity of the magazine but also contributed significantly in reference to the entity’s revenue. The art fairs denote a diversification in the product portfolio of the entity. It is vital for an entity to diversify its products to reduce the susceptibility of its revenues. Fairs do not only represent diversification, but also denote a venture, which complements its core undertaking which is publishing. Increase in art fairs would increase the organization’s popularity in major cities where the entity would host art fairs. This would prove vital in building the entity’s brand since such events would enhance it. Art fairs generate significant revenues. Subsequently, the entity can boost its incomes significantly through these fairs requiring only minimal amounts of funds to host. Additionally, cause no strains on the management personnel. Therefore, this seems like a good strategy since it requires minimal capital and personnel outlay to execute (Jones & Hill 2010, p. 78). Art school The partners think that the current educational system seems to hinder development of artists. This is because the current system entails work that is more academic. An ideal arts school should enable the artist express him/herself. The partners foresee that if they create an ideal art school it will enable the entity sell its values (Carrillo 2007, p. 10). Additionally, it would enable the entity nurture artists. The entity products relate to art. Therefore, such a school would provide individuals that can partake in development of its products. However, the management should establish if they would have a profit motive in such an undertaking. Developing an art school for charitable reasons would be a culmination of the partners’ passions rather than a profit motivated undertaking. The management should evaluate whether the current finances can support the development of an art school (Luo 1999, p. 79). Art Building concepts This alternative denotes a deviation from the entity core undertaking. The success of this alternative is tricky to forecast. The uptake of the leased properties will depend on various factors such as the location of the building, the existing market and cost. The entity should undertake a thorough research on whether there are investors willing to undertake such a venture. If there such investors exist, then the entity should access the possible income that would result. This would provide adequate basis of evaluation of such a venture. If this plan succeeds, this will denote the entity’s ambition to diversify the sources of its income (Hill & Jones 2011, p.39). Option five Option five denote an expansion strategy adopted by numerous firms. This strategy entails the acquisition of firms in related industries. The acquired firms enable the parent entity to increase its output. Such firm may produce complementary goods or inputs to the parent company. Therefore, the acquisition would enable the entity streamline its operations. The success of such venture would depend on the synergy between the new venture and the core operations of the parent entity (ICPSK 2003). Conclusion and recommendations Arts fairs contributed considerably to the success of the entity. The fairs enabled the entity attract more clientele. This resulted in increasing sales. Additionally, arts fairs increased the credibility of the magazine in the art world. Diligence in management has been vital in the realization of success in this entity. The management has maintained the values of the magazine in the period it has been in the market. The entity has also adopted an apposite managerial structure. The structure is a moderation of both functional and regional forms of organizational structures. Based on the evaluation of the possible strategies, the best expansion strategy for the entity currently is organizing of more arts fairs. This path would not strain the entity’s finances, personnel or management structure. Additionally, strategy would also increase the entity’s cash inflows and make their core product more popular. Arts fairs seem to contribute in numerous dimensions towards the progress of the entity. This report recommends that Frieze undertake more arts fairs as its expansion strategy. Bibliography Brown, R, Hussels, S & Titterington, K 2009, The business of contemporary art: The evolution of the UK’s leading contemporary arts magazine and fair, UK, Frieze publishing. Carrillo, E 2007, Corporate governance: shareholders’ interests’ and other stakeholders’ interests, Corporate Ownership & Control, Vol.4, no. 4, p. 96-102.  Hill, C & Jones, G 2011, Strategic Management Theory: An Integrated Approach, Cengage Publishing, Ohio. ICPSK, 2003, Corporate governance, Viewed on July 22, 2012 from Jones, G & Hill, C 2010, Strategic Management: An Integrated Approach, Cengage Publishing, Ohio. Kazmi, 2008, Strategic Management And Business Policy. Tata Mc-Graw Hill Publishers, New Delhi. Luo, Y1999, Entry and Cooperative Strategies in International Business Expansion, Greenwood Publishing, Connecticut.  Madura, J 2010, Financial Markets and Institutions, Cengage Publishing, Ohio. Madura, J 2011, International Financial Management, Cengage Publishing, Ohio. Sahlin-Andersson, K & Engwall, L 2002, The Expansion of Management Knowledge: Carriers, Flows, and Sources, Stanford University Press, USA. Read More